LIMRA: Annuity Sales Decline in First Quarter of 2013

WINDSOR, Conn., May 22, 2013 — Total annuity sales fell six percent in the first quarter of 2013, totaling $51.7 billion, according to LIMRA’s first quarter 2013 U.S. Individual Annuities Sales survey, which represents data from 94 percent of the market.

Variable annuity sales were down four percent in the first quarter to $35.5 billion — the sixth consecutive quarter of declines on a year-over-year basis. However, this was one percent higher than in the fourth quarter of 2012. VA guaranteed living benefit election rates were steady at 84 percent in the first quarter.

“VA sales continue to struggle despite sustained equity market gains,” said Joseph Montminy, assistant vice president and director of LIMRA annuity research. “In addition, all significant fixed annuity product types declined in the first quarter of 2013. In many ways, the current market is more challenging to many annuity manufacturers than the recent financial crisis.”

Total fixed annuity sales slipped to $16.2 billion in the first quarter, falling 11 percent compared with prior year. This is the eighth consecutive quarter of declines.

After record high sales in 2011 and 2012, first quarter indexed annuity sales dropped four percent to $7.8 billion, its lowest level in two years. However, election rates of guaranteed lifetime withdrawal benefit (GLWB) riders on indexed annuities remain strong. In the first quarter, 72 percent of consumers elected a GLWB rider, when available. LIMRA estimates that 88 percent of indexed annuities products in the market offer GLWB riders.

Sales of deferred income annuities (DIA) reached $395 million in the first quarter of 2013, 147 percent higher than the first quarter of 2012. Since the start of 2012, four companies have entered the DIA market. The growing interest in this market has existing players launching new or refined products, while other companies are exploring whether to enter the market. To learn more about DIA product features, please visit: LIMRA: Companies Give New Emphasis to Deferred Income Annuities.

Fixed immediate annuities fell six percent in the first quarter, totaling $1.7 billion.

Fixed-rate deferred annuity sales experienced another quarter of steep declines, down 25 percent in the first quarter to $5.2 billion. To put this into perspective, sales of fixed-rate deferred annuities in 1Q2009 were $26 billion, down 80 percent in four years.

Book value sales declined 26 percent in the first quarter to $4.2 billion; market-value adjusted (MVA) sales were $1.0 billion, down 23 percent compared with the first quarter of 2012.

To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2003-2012. A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by first quarter 2013 sales results will be released by the end of the week, as well as the first quarter Annuities Industry Estimates chart, can be found in the updated Data Bank.

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